Mumbai: In a move that will give HDFC Bank chief Aditya Puri and IndusInd Bank MD Romesh Sobti years at the helm, the RBI has said that bank chiefs and whole-time directors can stay on till 70. This is a major relaxation compared to the retirement age of 65 recommended by an RBI panel earlier this year.
In a notification on Tuesday, the central bank said it has taken this decision after examining the issue in the light of the provisions of the Companies Act, 2013. Here, Section 196(3) prescribes that no company shall appoint or continue the employment of any person as managing director, whole time director or manager who is below the age of 21 or above 70.
“It has been decided that the upper age limit for MD & CEO and other WTDs (whole-time directors) of banks in the private sector should be 70 years, i.e., beyond which nobody should continue in the post,” said a notification from RBI, adding “Within the overall limit of 70 years, individual bank’s boards are free to prescribe a lower retirement age for the WTDs, including the MD & CEO, as an internal policy.”
Among private bank chiefs, Puri (63) and Sobti (64) are the only ones who are above 60. CEOs of all other new generation private banks are below 60 years. Among the old generation bank, P G Jayakumar, MD of Dhanlaxmi Bank, and P Jayarama Bhat, MD of Karnataka Bank, are both 62 years old. Banking analysts say the move is a positive for banking stocks as it ensures continuity of management.
Yet, within the overall limit of 70 years, the boards of individual banks are free to prescribe a lower retirement age for the whole-time directors, managing directors and chief executive officers as their internal policy, the RBI said.